"The influence of the Government of China is real within the New Zealand government," Mr Peters says.

"New Zealand became vulnerable the moment National recruited list MP Jian Yang. His decade of work with Chinese military intelligence has only now been opened up, but not yet laid bare."

Dr Yang came under scrutiny after Newsroom alleged he had studied and taught at a spy school before moving to New Zealand.

He denied ever being a spy and denied ever having intelligence training, but admitted teaching students English to help them with their spying activities.

"If you define those cadets as spies then I was teaching spies yes," he said.

Mr Peters is accusing Dr Yang of being part of a communist takeover of NZ.

"We know he has used his government position to push China's interests," he says.

"In six years in Parliament, Dr Yang has successfully embedded himself in the NZ government. But who is he really representing? National and Dr Yang cannot prove he has 'come in from the cold.'"

On Wednesday, Newsroom reported Dr Yang had studied and taught at the People's Liberation Army-Air Force Engineering College. He also spent time at the Luoyang Language Institute, run by the Third Department, which carries out spying activities for China.

Sources told Newsroom this meant Dr Yang would have been a member of the Communist Party and an officer in the Chinese army's military intelligence.

However Dr Yang says the allegations against him are a "smear campaign", and denies passing on any information to China during his time in New Zealand.

"I've been very active in promoting a relationship, everyone knows that," he says.

"I can understand people can be concerned, because they do not understand Chinese system, but once they understand the system they should be assured this is nothing really you should be concerned about."

However Mr Peters says he is concerned and is calling for action.

"National must act now and a full inquiry is required. There must be proof Dr Yang is not a risk," he says.